FAR 49.402-7—Other damages.
Plain-English Summary
FAR 49.402-7 addresses what the Government may recover after a contractor default or after the contracting officer chooses an alternative course of action instead of terminating for default under FAR 49.402-4. It covers two separate damage concepts: liquidated damages that are already provided for in the contract, and other ascertainable damages the Government can prove, including administrative costs caused by the default. The section requires the contracting officer to promptly assess and demand liquidated damages when they are due, and it makes clear that those damages are in addition to any excess repurchase costs recovered under the default framework. It also directs the contracting officer to consult legal advice and use the procedures in FAR subpart 32.6 to assert a claim for any other recoverable damages. In practice, this section ensures the Government does not stop at termination or repurchase recovery alone, but also pursues contractually agreed liquidated damages and any additional measurable losses caused by the contractor’s failure to perform.
Key Rules
Assess liquidated damages promptly
If the contracting officer terminates for default or uses another remedy instead of termination for default, the contracting officer must promptly determine and demand any liquidated damages the Government is entitled to under the contract. The duty is immediate and does not depend on whether other recovery actions are also being pursued.
Liquidated damages are additive
Under the liquidated damages clause at FAR 52.211-11, liquidated damages are recoverable in addition to excess repurchase costs. The Government is not limited to one remedy if the contract and facts support both.
Pursue other ascertainable damages
If the Government suffered additional measurable losses because of the default, including administrative costs, the contracting officer must take action to assert a demand for those damages. The damages must be ascertainable, meaning they can be identified and supported rather than speculative.
Use legal advice before asserting claim
The contracting officer must rely on legal advice when deciding how to pursue other damages. This requirement helps ensure the claim is legally supportable, properly documented, and asserted in the correct manner.
Follow FAR subpart 32.6 procedures
Claims for other damages must be handled under the procedures in FAR subpart 32.6. That means the Government’s demand must be processed as a contract debt or claim using the applicable collection and demand procedures.
Responsibilities
Contracting Officer
Promptly assess and demand any liquidated damages due under the contract after a default termination or an alternative action instead of default termination. Identify any other ascertainable damages caused by the default, obtain legal advice, and take the appropriate action under FAR subpart 32.6 to assert the Government’s demand.
Legal Counsel
Provide legal advice on whether additional damages are recoverable, how they should be documented, and what collection or demand procedures should be used to assert the Government’s claim.
Government
Document and support the amount of liquidated damages, excess repurchase costs, and any other ascertainable damages, including administrative costs, so the demand can be sustained if challenged.
Contractor
Remain liable for contractually authorized liquidated damages and any other proven damages resulting from the default, subject to the contract terms and applicable claims procedures.
Practical Implications
This section prevents the Government from overlooking recoverable money after a default; the contracting officer should review the contract for liquidated damages clauses and calculate them quickly.
Liquidated damages and excess repurchase costs can both be recovered, so officers should not treat repurchase recovery as the only financial remedy.
Claims for other damages must be supportable and documented; speculative losses or poorly tracked administrative costs are common weak points.
Legal review is not optional for other damages, so contracting officers should involve counsel early, especially when the amount is significant or the theory of recovery is uncertain.
Because the section points to FAR subpart 32.6, officers should use the proper debt-collection and demand-letter process rather than informal billing or ad hoc correspondence.
Official Regulatory Text
(a) If the contracting officer terminates a contract for default or follows a course of action instead of termination for default (see 49.402-4 ), the contracting officer promptly must assess and demand any liquidated damages to which the Government is entitled under the contract. Under the contract clause at 52.211-11 , these damages are in addition to any excess repurchase costs. (b) If the Government has suffered any other ascertainable damages, including administrative costs, as a result of the contractor’s default, the contracting officer must, on the basis of legal advice, take appropriate action as prescribed in subpart 32.6 to assert the Government’s demand for the damages.